1. The audit of the Aljunied-Hougang Town Council’s (“AHTC”) financial statements has been delayed by significant resources of the Town Council being devoted to KPMG’s review of the Town Council’s financial processes and separately, a review of all past payments made by the Town Council from 27 May 2011 to 27 Nov 2015 as ordered by the Court of Appeal. In addition, AHTC was also working to finalise and submit Punggol East constituency’s audited financial statements to Pasir Ris-Punggol Town Council (“PRPTC”). AHTC also continues to attend to queries from PwC, PRPTC’s accountants for a Past Payment Review report, even though the Court of Appeal has clarified that this requirement is not one that supersedes KPMG’s work, nor is such a review envisaged by its orders in CA114 of 2015, Attorney-General vs AHPETC.
2. By way of MND’s guidelines, the appointment of the statutory auditor for all Town Councils is usually confirmed by March 2016. However, the approval for the appointment of AHTC’s auditor was received in May 2016, as MND had originally rejected AHTC’s choice of auditor. Upon appeal by AHTC, MND reviewed the decision and approved the originally proposed auditor to carry out the statutory audit of AHTC’s financial statements for FY15/16. This delay resulted in some lost time before AHTC’s auditor could begin work to audit the financial statements as it had to arrange for resources at short notice to commence the needful. *(see timeline below)
3. By way of the same MND guidelines referred to above, the Town Council nonetheless submitted its unaudited financial statements for FY15/16 to MND on time by 30 June 2016.
4. However, the KPMG monthly report of July 2016 necessitated that AHTC’s appointed auditor look more closely at some of the transactions highlighted by KPMG. The TC agreed that this was the prudent thing to do, so as to comprehensively assess whether KPMG’s findings would have any bearing on the audit of the Town Council’s financial statements for FY15/16. MND also came back with a number of queries on the unaudited financial statements which the auditor was to additionally look into, although AHTC acknowledges that these queries form the basis of the MND requirement that all TCs are to submit their unaudited financial statements for the preceding year by 30 June.
5. The TC’s appointed auditor also had the task of auditing the financial statements for Punggol East constituency. AHTC considered this to be a priority as it was aware that PRPTC should receive these statements promptly in order to complete its own town-wide audit. In view of KPMG’s ongoing work, it was clear to AHTC that it would not be able to submit the needful to PRPTC in good time for the audited Punggol East constituency’s financial statements to be incorporated into PRPTC’s town-wide audited financial statements. As such, AHTC wrote to PRPTC, and separately to MND, in the first half of August 2016 to inform them of this, and to reiterate that it would work to submit the outstanding audited report as soon as practicable.
6. On 28 September 2016, AHTC submitted the audited report for Punggol East constituency to PRPTC. It also invited PRPTC to meet with AHTC’s auditors to discuss any matters arising from the latter.
7. In the meantime, KPMG is in the process of finalising its draft report on the Past Payment Review to AHTC. We do not anticipate this to significantly affect the TC’s audit of its financial statements for FY15/16. However, as matter of prudence and professionalism, our auditor would inevitably have to peruse this report carefully before signing off on the TC’s audited financial statements for FY15/16. In view of the foregoing, it would not be helpful for the TC to prescribe a submission date to our auditor for the audited financial statements for FY15/16 in the event there are new queries arising from the Past Payment Review report.
8. From the perspective of AHTC’s Members of Parliament and as a matter of principle, it is important that AHTC submit all relevant reports, financial statements or otherwise, to MND and/or any other relevant authority, on time.
9. The FY14/15 audited financial statements were submitted to MND on schedule by 30 Aug 2015. AHTC would have preferred to continue in that vein.
10. For the most part of the 2016 however, AHTC’s Finance Department has simultaneously sought to address queries pertaining to the audit of its financial statements for FY15/16, completed the Punggol East constituency’s audit and attended to KPMG’s court-directed appointment, the latter of which at one time involved more than 20 accountants and staff from KPMG on AHTC’s premises, even more than the number deployed during the Auditor-General’s Office’s special audit of the Town Council in 2014. Effectively, over the last few months, AHTC has attended to KPMG, PwC and its own auditors and provided documents and information to multiple auditors while running a live operation so as not to disrupt services to the residents of AHTC.
11. AHTC notes that it is in the Town Council’s interests to expeditiously prepare the audited financial statements for FY15/16, so that it can submit the needful to MND. It will continue to press on to do so.
ALJUNIED-HOUGANG TOWN COUNCIL
22 October 2016
UPDATE TO AHTC STATEMENT DATED 22 OCT 2016
In view of the MND’s response to the statement above, AHTC would like to share the following timeline of events to give context to MND’s second statement of 22 Oct 2016 at 2220hrs.
Timeline of events leading up to appointment of AHTC’s auditor for FY15/16 audit
|25 January 2016||MND acknowledges receipt of AHTC’s proposal for the appointment of auditor for its FY15/16 financial statements.
|1 March 2016||AHTC sends its first reminder to MND querying the appointment of AHTC’s proposed auditor.
|3 March 2016||MND replied that it was still reviewing AHTC’s proposal and would contact AHTC if more information was required.
|21 March 2016||Chairman AHTC, Pritam Singh sends a second reminder to MND querying the appointment of AHTC’s proposed auditor.
|28 March 2016||MND informs AHTC’s proposal for the appointment of auditor was “incomplete” and that it had a concern about a finding about AHTC’s proposed auditor from ACRA.
|29 March 2016||AHTC’s proposed auditor informs AHTC that ACRA’s findings were “not severe” and that the firm was not barred from undertaking work as a public accountant.
|5 April 2016||AHTC prepares “Invitations to Quote” (ITQ) for auditors in anticipation of the rejection of its proposed auditor by MND with the closing date set for 15 April 2016. Five audit firms are invited to quote.
|25 April 2016||MND informs AHTC that the Auditor-General’s Office (AGO) had recommended against the appointment of AHTC’s auditor and informs AHTC to submit a revised proposal on the appointment of an auditor for AHTC’s FY15/16 accounts as soon as possible.
|26 April 2016||AHTC writes to KPMG to consider undertaking the FY15/16 audit given its growing familiarity with AHTC’s processes arising out of its engagement pursuant to CA114/2015 and the synergies of this arrangement. AHTC informs KPMG that since MND’s letter of 28 March 2016, it had issued an ITQ to various accounting firms to undertake the audit of its FY15/16 financial statements, however no responses were forthcoming. KPMG advised that it preferred to work singularly on its engagement with AHTC arising from CA114/2015.
|3 May 2016||AHTC makes preparations for a second ITQ exercise with the closing date set for 13 May 2016. Seven audit firms are invited to quote (no firms respond by the deadline).
|7 May 2016||AHTC writes to MND requesting it and the AGO to review the rejection of AHTC’s originally proposed auditor dated 25 April 2016. AHTC informs MND that in view of KPMG’s appointment as the accountant under CA114/2015 and its remit to identify and remediate weakness in AHTC’s financial processes amongst others, KPMG’s appointment was a significant safeguard with respect to MND and AGO’s concerns. AHTC informs MND that it had already conducted one ITQ exercise which did not yield any new quotations from audit firms.
|14 May 2016||AHTC writes to MND querying the result of its appeal dated 7 May 2016.
|30 May 2016||MND informs AHTC that the AGO had reviewed AHTC’s appeal and noted AHTC’s assurance of 7 May 2016 that “KPMG has been appointed to focus significant resources to identify and remediate weaknesses in AHTC’s accounting system and accounting lapses”, and that AHTC had committed to make all of KPMG’s monthly reports public. It also noted that ACRA’s finding on AHTC’s proposed auditor was “not considered to be severe”.